STUDY
Ten rays of light
in the Greek crisis
Nick Malkoutzis
October 2013
n The economic and political crisis Greece has been going through during the last three
years has led to dramatic changes. The decline of the Greek economy in connection
with an unprecedented rise of unemployment and poverty has put society under huge
pressure.
n Several reform packages have been introduced and progress has been made in
various fields. But even if growth returns in 2014 as predicted by many economists
Greece’s exit from the crisis is still a long way off.
n Greece’s image has changed fundamentally during the last years: Perceived mainly
as a sunny and relaxed tourist destination in the past Greece is now seen as a
country where laziness, corruption and chaos prevail. Both perceptions are based
on stereotypes and ignore the diversity of the Greek society and the complexity of its
politics and economy.
n Nevertheless there are positive developments in different fields, be it in society, in the
economy or in the public administration sector. Ten examples can hopefully complete
the picture of a country going through a painful process of transformation and show
possible ways out of the crisis.
MALKOUTZIS | TEN RAYS OF LIGHT IN THE GREEK CRISIS
Table of contents
1.Introduction
2. A drastical fiscal adjustment put public finances on a sounder footing
3. Squaring up to the Lernaean hydra of tax evasion
4. Banishing ‘phantom’ pensions
5. EU Task Force and the cohesion funds heal a damaged relationship
6. Standing against corruption and demanding accountability
7. Volunteers try to fill the void left by a retreating state
8. An awakening of consumer conscience
9. Tech start-ups click into place
10.Here comes the sun: photovoltaics on the rise
11.Greek wine raises a glass to exports
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MALKOUTZIS | TEN RAYS OF LIGHT IN THE GREEK CRISIS
1. Introduction
the reader’s understanding of Greece and enrich the
debate on possible ways out of the crisis, even if this is a
journey that will involve many small steps.
From 2009 Greece has been experiencing one of
its deepest economic and political crises since the
country‘s bloody civil war. Greece‘s troubled economy
and beleaguered political class have been the focus
of attention in Europe since the signing of a bailout
agreement in May 2010. This publication aims to analyse
a few aspects of Greece’s diverse and sometimes
contradictory reality, thus trying to draw a more
comprehensive and authentic picture of the country’s
situation.
2. A drastic fiscal adjustment put public
finances on a sounder footing
While many of the reasons behind the Greek crisis are
in dispute, as are the methods that have been chosen
to tackle it, there is one aspect over which there should
be no disagreement: Greece’s public finances were in
a catastrophic state in 2009.
In the last three years, Greece has changed dramatically:
The economy has shrunk by more than 20 percent, the
unemployment rate has risen to nearly 30 percent and
as high as 60 percent for young people, wage cuts and
tax hikes have reduced disposable incomes by about 30
percent and poverty is rising.
The 2009 deficit closed at 30.9 billion euros (15.6
percent of GDP) after a complete collapse of revenues,
which missed the annual target by 11 billion euros.
Government expenses increased by 10 billion euros
compared to 2008 and Greece entered the second year
of its long recession, with the economy contracting by
3.1 percent.
Meanwhile, a series of governments have tried to reform
the country by reducing bureaucracy, downsizing the
public sector and liberalising markets. Headway has
been made in a few areas but in others positive signs are
yet to emerge. While there has been remarkable progress
in reducing the budget deficit, Greek society continues to
suffer the effects of the crisis. Many economists predict
that growth will return in 2014 for the first time since
2008 but Greece‘s exit from the crisis still seems a long
distance away.
Restoring some semblance of stability to the country’s
public finances has been an enormous task requiring
considerable cutbacks in the public sector and
sacrifices from taxpayers. However, this long and
hard road could lead Greece to a primary surplus as
early as this year. The steps taken to achieve this are
almost unprecedented internationally, as Fitch Ratings
outlined on May 141, when it upgraded Greece’s
sovereign rating from CCC to B-.
The crisis and the problems it has created in Greece‘s
cooperation with its European partners have altered the
country‘s image. Whereas Greece was once regarded
as a sunny destination for tourists, relaxed and maybe a
bit disorganised, now the image of the lazy Greeks, who
are chaotic in every respect, prevails. Before the crisis,
Greece was perceived with a certain amount of naiveté,
now it is treated mostly with cynicism and sarcasm. Both
approaches prevent observers from seeing the details
and understanding the broad diversity of Greek society
and the complexities of its politics and economy.
“Greek primary fiscal adjustment of over 9 percent
of GDP in 2009-12 (excluding one-off support to the
financial sector), and around 16 percent in cyclically
adjusted terms, ranks as the most ambitious instance
of fiscal consolidation among advanced economies in
recent times,” the ratings agency said. “The current
account deficit has also shrunk from 10 percent of
GDP in 2011 to 3 percent in 2012.”
Fiscal data for 2013 suggests Greece is on track to
achieve a primary surplus this year. Budget figures
for the year up to August showed that Greece had a
deficit of 4 billion euros and a primary surplus of 1.3
billion euros, which is well ahead of the targets set by
Greeks are living through one of the severest crises in
their history but there is some cause for hope, partly as
a result of the dramatic changes described above. There
are faint beams of hope breaking through the overall
bleak atmosphere. These ten rays of light, as we call them
in the title of this publication, can hopefully complement
1. http://www.fitchratings.com/creditdesk/press_releases/detail.cfm?pr_
id=791093
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MALKOUTZIS | TEN RAYS OF LIGHT IN THE GREEK CRISIS
the troika. It is expected that Greece’s primary surplus
at the end of the year will be around 100 million euros.
Greece Primary and Total Balance (EUR bln)
.........................................................................................................................................................................................................................................................................
.........................................................................................................................................................................................................................................................................
.........................................................................................................................................................................................................................................................................
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.........................................................................................................................................................................................................................................................................
0
.........................................................................................................................................................................................................................................................................
....................................................................................................................................................................................................................................................................................................................................................................................................................................
.........................................................................................................................................................................................................................................................................
10
10
0
-10
....................................................................................................................................................................................................................................................................................................................................................................................................................................
-10
-20
....................................................................................................................................................................................................................................................................................................................................................................................................................................
-20
-30
....................................................................................................................................................................................................................................................................................................................................................................................................................................
-30
-40
2000
2001
2002
2003
2004
2005
2006
2007
GENERAL GOVERMENT DEFICIT/SURPLUS
2008
2009
2010
2011
2012
-40
GENERAL GOVERMENT PRIMARY BALANCE
Source: Thomson Reuters Datastream - Eurostat
In terms of taxation, there have been some improvements
in the collection system but the bulk of extra revenues
have been the result of increases in Value Added Tax,
income tax, special consumption tax and property tax.
It should be noted, however, that achieving this surplus
has required ongoing cuts in public sector spending
and new tax measures to make up for the fact that the
economy has been contracting since 2008, shrinking by
a total more than 20 percent over the last six years. In
2012, for example, public revenues rose from 42.4 billion
euros in 2011 to 44.7 billion euros at the same time that
the economy contracted by 6.4 percent.
As a result of these changes to taxation, revenues came
in at 86.7 billion euros last year, which are slightly higher
than 2009, when Greece’s GDP peaked. Property tax
alone is expected to bring in 3.2 billion euros this year,
which is six times what Greeks were paying in 2009.
Overall, public primary spending has been reduced from
112.8 billion euros in 2009, when the crisis first became
apparent to 96.4 billion in 2012. It is expected that by the
end of this year, public spending will have been pared
back to the same level as 2006.
Greece has committed to producing 13 billion euros of
new savings this year and next. A quarter of this will come
from increased tax revenues and the rest from reductions
in public spending. These savings in the civil service
are partly the result of addressing waste and reducing
4
12
11
10
.........................................................................................................................................................................................................................................................................
.........................................................................................................................................................................................................................................................................
.........................................................................................................................................................................................................................................................................
.........................................................................................................................................................................................................................................................................
09
80
.........................................................................................................................................................................................................................................................................
08
....................................................................................................................................................................................................................................................................................................................................................................................................................................
.........................................................................................................................................................................................................................................................................
07
80
.........................................................................................................................................................................................................................................................................
06
100
.........................................................................................................................................................................................................................................................................
5
05
....................................................................................................................................................................................................................................................................................................................................................................................................................................
.........................................................................................................................................................................................................................................................................
Source: Thomson Reuters Datastream - Eurostat
04
100
.........................................................................................................................................................................................................................................................................
GROSS NOMINAL CONSOLIDATED DEBT AS % of GDP: GREECE
03
4. http://ec.europa.eu/europe2020/pdf/themes/05_health_and_health_
systems.pdf
2. http://apografi.yap.gov.gr/apografi/Flows_2013.htm
3. http://ec.europa.eu/europe2020/pdf/themes/01_public_finances_
growth_friendly_expenditure.pdf
02
120
.........................................................................................................................................................................................................................................................................
01
....................................................................................................................................................................................................................................................................................................................................................................................................................................
.........................................................................................................................................................................................................................................................................
00
120
.........................................................................................................................................................................................................................................................................
99
140
.........................................................................................................................................................................................................................................................................
98
....................................................................................................................................................................................................................................................................................................................................................................................................................................
.........................................................................................................................................................................................................................................................................
97
140
.........................................................................................................................................................................................................................................................................
96
160
.........................................................................................................................................................................................................................................................................
95
....................................................................................................................................................................................................................................................................................................................................................................................................................................
.........................................................................................................................................................................................................................................................................
94
160
.........................................................................................................................................................................................................................................................................
93
180
.........................................................................................................................................................................................................................................................................
92
....................................................................................................................................................................................................................................................................................................................................................................................................................................
.........................................................................................................................................................................................................................................................................
91
Despite the improvements in Greece’s fiscal data, it
should not be ignored that the country’s public debt
remains extremely high. Greek government debt declined
from 170.3 percent of GDP in 2011 to 160.5 percent, or
305.3 billion euros, at the end of this year’s first quarter,
according to Eurostat. This also is one of the aspects of
the program that draws a lot of criticism.
The majority of savings have been produced by reduced
spending in a number of public services, including
frontline ones such as health and education. Greece
spends just 4 percent of its national budget in the
60
60
European Union, which is one of the lowest proportions
in the European Union3 . Greece also spends well below
the EU average on public healthcare4 .
Achieving this massive fiscal consolidation while
maintaining the appropriate level of basic services has
been a major challenge for the Greek government and
one of the areas where the adjustment program has
produced many problems and complaints.
the size of the workforce. Although direct dismissals
of public servants did not begin until this summer, the
non-renewal of short-term contracts, retirements and a
limit on the number of new hirings means the number of
people working full-time in central and local government
fell below 620,0002 in June. The first such census carries
out in the summer of 2010, shortly after Greece signed its
bailout agreement, indicated there were almost 770,000
people working in the core public sector. Civil servants‘
salary expenses rose from 13.9 billion euros in 2005 to
18.5 billion in 2009 but fell again to 13.7 billion last year.
.........................................................................................................................................................................................................................................................................
180
.........................................................................................................................................................................................................................................................................
90
MALKOUTZIS | TEN RAYS OF LIGHT IN THE GREEK CRISIS
Greece Gross Public Dept as % GPD
MALKOUTZIS | TEN RAYS OF LIGHT IN THE GREEK CRISIS
according to the World Bank. In fact, if Greece were able
to reduce its shadow economy by a quarter, it would be
roughly equal to the Eurozone average.
However, one of the undoubted benefits of the bailout has
been to lighten the short-term load on Greece in terms
of interest payments. The new bailout terms agreed in
December 2012 and debt restructuring that took place
in March last year means that Greece has few bonds
maturing in the near future and will have to set aside fewer
public revenues to pay of its national debt over the next
few years. For example, Greece paid out in interest 13.2
billion euros in 2010 and 15 billion euros in 2011, whereas
in 2013, it will have to pay just under 9 billion euros.
Nevertheless, Greece has a serious problem with its
tax administration. Recently, some significant steps
have been made towards improving it but there is still a
long way to go. Greece has received extensive advice
from the troika and the European Union Task Force on
updating and improving its tax collection methods, which
were susceptible to bureaucracy, lack of organization
and corruption. For example, experts from France,
the Netherlands, Sweden and Belgium have provided
assistance in areas ranging from conducting checks on
high income earners and creating an automated system
to remind taxpayers about unpaid debts.
3. Squaring up to the Lernaean hydra
of tax evasion
Improving tax collection in Greece has been one of
the dominant themes over the past three years as the
government not only tries to boost its revenues but also
aims to ensure greater fairness amongst taxpayers,
which is a key factor towards increasing the acceptance
of the challenging fiscal adjustment program the country
embarked on in 2010.
The technical assistance Greece has received was
aimed at achieving a number of improvements the troika
had written into the bailout program. These included
setting up task forces to implement anti-evasion actions
and tabling legislation to remove obstacles for revenue
administration. This was backed up by quantitative
performance targets, such as auditing a certain amount
of large taxpayers and collecting debts. In 2011, for
instance, Greece beat its target of 400 million euros for
existing debts by collecting 946 million euros. It also met
the troika requirements on audits of wealthy and high
income taxpayers by checking 404 individuals against a
target of 400.
Although very high, the extent of tax evasion in Greece
and its significance for public finances is sometimes
exaggerated. Using World Bank figures, the Tax
Justice Network5 found in late 2011 that Greece had
the third largest shadow economy in the Eurozone. It
was equivalent to 27.5 percent of GDP, making it one of
nine euro-area members that has a shadow economy
that is equivalent to more than a fifth of its GDP. It is
sometimes claimed that if Greece were able to wipe out
its tax evasion problem, it would also resolve its fiscal
difficulties. This is a misnomer for two reasons.
4. Banishing ‘phantom’ pensions
Firstly, it fails to take into account that the self-employed, a
group that is a common source of tax evasion throughout
the world, make up a sizeable part of the Greek economy.
In the European Union, Greece has by far the highest
rate of self-employed people in its labor force with 31.9
percent of Greeks working for themselves against an EU
average of 15 percent, according to Eurostat figures 6 .
Secondly, there is no country in the Eurozone with no
shadow economy at all. The smallest is in Luxembourg
and Austria, where it reaches 9.7 percent of GDP,
One of the main problems the Greek state faced at the
start of the crisis was putting right the obvious public
administration inefficiencies that had become an undue
burden on the country’s finances while also being a
source of gross unfairness. An example of this was
Greece’s pension system and the poor way in which it
was managed. Bureaucracy, corruption and neglect
meant that even in 2010 the government did not have
a clear picture of how many pensioners it was paying
for and whether they all had a legal entitlement to their
monthly retirement pay.
5. http://www.tackletaxhavens.com/Cost_of_Tax_Abuse_TJN%20
Research_23rd_Nov_2011.pdf
6. http://epp.eurostat.ec.europa.eu/cache/ITY_PUBLIC/3-07062013-BP/
EN/3-07062013-BP-EN.pdf
As a result, Greece’s main social security fund, IKA,
carried out its first ever census between July 1, 2011 and
September 30, 2011. This was followed by a second audit
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MALKOUTZIS | TEN RAYS OF LIGHT IN THE GREEK CRISIS
for retired farmers for whom it is difficult and costly to get
to their nearest government office.
in 2012 to confirm the findings. The state also reviewed
the pensions it was paying to retired civil servants and
to the wives and unmarried daughters of public sector
workers who had died. The Agricultural Insurance
Organization (OGA), which provides pensions to farmers,
completed its census in March this year.
Undoubtedly, the main benefits of conducting these
censuses has been to stamp out fraud and injustice, while
allowing the Greek state to close a hole in its finances that
should not have existed in the first place.
For the censuses, pensioners were required to present
themselves either at an IKA office or at the place they
receive their retirement pay from, such as post offices
and banks, with their pension documents, ID cards and
social security numbers. Pensioners unable to leave
their homes or those living abroad were able to authorize
someone to do this on their behalf.
The process of retrieving money that had been illegally
claimed has begun, although it promises to be a lengthy
one due to the backlog of cases in Greek courts. By the
end of January, IKA had launched legal action against
almost 400 claimants who it believes defrauded the
fund out of a total of about 10 million euros. In May,
Alternate Finance Minister Christos Staikouras informed
Parliament that the state had recovered 13.6 million
euros from pensions to civil servants that should not have
been paid and that it was seeking to recoup another 12.4
million euros.
This process allowed the data to be gathered by the newly
created Computer Center for Social Security Services
(IDIKA), which created the “Ilios” system to monitor
monthly payments and log pensioners’ data. The first
Ilios report in June showed that there were 2.71 million
Greeks claiming pensions that averaged at 907.65 euros,
including auxiliary pensions. The average basic monthly
pension was found to be 694.56 euros.
5. EU Task Force and cohesion funds
heal a damaged relationship
Presenting figures to Parliament at the end of March,
Labor Minister Yiannis Vroutsis said that a total of 51,551
bogus pensions had been discovered with the most
common form of deception being relatives of deceased
pensioners continuing to collect monthly retirement pay
after the claimant had died. Vroutsis said that the annual
value of the unjustified claims was about 420 million
euros and that the government would launch legal action
to recover as much of the unlawfully claimed money as
possible.
The crisis has severely tested Greece’s relationship with
some of its Eurozone partners and the European Union as
a whole. Unpopular policies, the emergence of insularism
at a political level and frequent bashing from the media
have all taken their toll on the bonds between Greece and
its European partners.
An opinion poll carried out by Public Issue in June7 this
year indicated that 52 percent of Greeks have a negative
view of the EU and 43 percent of the euro. These levels
of scepticism are considerably higher than just a few
months, let alone years, earlier. A Eurobarometer survey
in July8 suggested that just 44 percent of Greeks feel
they are citizens of the EU, against a Union average of
62 percent. Eight in 10 Greeks said they tend not to trust
the EU.
Vroutsis also said the censuses had led to the state
discovering that in about 350,000 cases, there
were inconsistencies in documentation, such as tax
identification numbers. He said that although these were
not instances of fraud, the new information would allow
the government to correct these mistakes.
However, behind the scenes and at a more technocratic
level, a substantial amount of effort has been made to
strengthen Greece’s relationship with the EU and to
provide the sense of support that is sometimes absent in
the public debate.
The census process has been part of wider effort to
modernize the way pensions are paid and received.
This year, for instance, will be the first that those
claiming farming pensions can use the Internet to obtain
confirmation of the payments they have received so they
can submit this certificate when completing their tax
declaration. This is a small but significant improvement
7. http://www.publicissue.gr/2492/varometro-jun-2013/
8. http://ec.europa.eu/public_opinion/archives/eb/eb79/eb79_fact_el_en.pdf
7
MALKOUTZIS | TEN RAYS OF LIGHT IN THE GREEK CRISIS
The signs are that the cooperation between the EU
Task Force and the Greek government has helped
make better use of the financing available. By the end
of 2012, absorption had increased to 46.25 percent and
when the Task Force’s report was published in April, the
average had shot up to 56 percent. This benefited both
major national projects, such as highway construction,
which have been stifled because of the shrinking of
Greece’s public investment program, regional schemes,
such as the funding of municipal nursery schools, and
entrepreneurial endeavours, such as providing working
capital for tourism businesses on Greek islands.
In this respect, the EU Task Force for Greece has made a
significant contribution. Launched in July 2011, the Task
Force has provided Greece with useful advice on public
sector reform and the allocation of EU cohesion funds.
It has acted as a mediator between Greece and its EU
partners so the government could benefit from technical
expertise available in other member states as it tries to
reorganise its public administration. Assistance has been
provided in a number of policy areas.
In its fourth quarterly report9, published in April 2013,
the Task Force noted progress in its efforts to facilitate
reforms. “In the first quarter of 2013, the Greek
government has advanced on a wide range of reforms,”
the report said. “It has in particular made progress with
planning of the reorganisation of Greek Ministries, and
initiated important reforms of the business environment.”
The report also noted that Greece was making greater
use of the technical assistance on offer. As of April,
the Task Force was facilitating the provision of advice
on 93 projects in 12 policy domains, which included
administrative reform, taxation, enhancing access to
finance, tackling corruption and improving the delivery of
justice. For example, EU experts spent 100 days between
January 2012 and April 2013 to help Greek authorities
fight money laundering and corruption.
In fact, a decision by the European Commission to accept
a request from Athens for its 811-million-euro share in the
construction of new highways to be covered by cohesion
funds meant that in the first half of 2013, Greece comfortably
beat the absorption target included in the terms of its
bailout with the Eurozone and International Monetary Fund.
The troika had asked Greece to absorb 1.3 billion euros
between January and June but Athens actually managed
to rake in 2.1 billion euros, which was almost 70 percent
above the target. It was the second consecutive six-month
period that Greece had exceeded its absorption target
and meant that the rate at which the country is drawing in
cohesion funds is the fourth highest in the EU.
Perhaps, though, the Task Force’s most significant impact
has been in supporting Greece in its effort to increase its
absorption of EU cohesion funds, which amount to more
than 20 billion euros for the 2007 to 2013 period. At a time
when there is a shortage of liquidity and the government
is short of money, this financing is extremely important to
both the public and private sectors in Greece, especially
after the decision to increase the EU’s share in the cofinancing rate to 95 percent from the previous rate of 78
percent.
At a time when Greece’s relationship with the EU and the
euro is under strain, the input from the Task Force and
the increased absorption of cohesion funds shows that
all is not lost. In this time of crisis, they have provided
a reminder as well as tangible evidence that Greece
continues to be a fellow member of the Union, a fact
that is often lost in the swirl of debate about austerity,
budget targets, reform goals and the role of European
institutions.
EU funds have long played a significant role in Greece’s
economy. It is estimated that between 2000 and 2009,
Greece’s GDP grew by an extra 1.6 percent each year
than it would have without the help from Brussels10 . This
was the third highest rate in the Union. However, the onset
of the economic crisis created an incentive for Greece to
increase its absorption rate for EU funds, which in 2012
was just below the Union average at 41.4 percent.
6. Standing against corruption and
demanding accountability
It is widely accepted in Greece that apart from
experiencing an economic collapse, the country has also
suffered a crisis of values. While the exact economic
reasons that led to Greece’s problems today are still
the subject of intense debate, there are few Greeks
who would challenge the assertion that an ever-growing
moral compromise at a political and societal level also
contributed to the country’s downfall.
9. http://ec.europa.eu/commission_2010-2014/president/pdf/qr4_en.pdf
10. http://www.eurobank.gr/Uploads/Reports/GREECE%20MACRO%20
FOCUS%20December%2022%202011.pdf
8
MALKOUTZIS | TEN RAYS OF LIGHT IN THE GREEK CRISIS
friends and volunteers that has chosen to monitor the
implementation of more than 30 government policy
decisions, which range from reducing the bureaucracy
faced by businesses to the adoption of an electronic
prescription system. The areas that have been chosen
are ones that affect citizens’ daily lives rather than being
related exclusively to Greece’s bailout agreement.
The prosperity that many enjoyed over recent years
meant that a blind eye was often turned to corruption
in the public sector, undesirable practices in the private
sector and an all-round feeling of impunity for those
who did not want to be bound by the legal and ethical
boundaries set by the Greek state and society.
The crisis has prompted a reaction to this unhealthy status
quo. Its most visible form is the proliferation of citizens
movements formed with the intention of highlighting the
deficiencies and restoring trust within society.
Through its website (http://www.emeisoipolites.gr/) the
group encourages volunteers to follow the progress
of policies so the public can be aware of whether the
government is living up to its pledges so it can exercise
pressure on public officials to complete the tasks. Any
information gathered is posted on the website and the group
says it will notify ministers about any delays it discovers.
One of the best known unethical practices of the last few
decades in Greece was the payment of bribes to doctors
at public hospitals. Although this was by no means the
case with all physicians, it was not uncommon for patients
to pay cash in an envelope (known as a fakelaki) to ensure
quicker and better treatment.
The group has been set up by Notis Paraskevopoulos,
a transport engineer, who worked in the office of
former Prime Minister George Papandreou, where he
was responsible for monitoring ministers’ efficiency.
Paraskevopoulos has said he was frustrated in his
attempts to keep Papandreou informed and that this
acted as a motivation to form Emeis oi Polites, which had
more than 120 volunteers by May.
This practice and other unwelcome tendencies are
being addressed by a group called the Young Doctors’
Movement. The aim of the group is to bring together doctors
who are just joining the national health system and who are
determined to display a greater commitment to patients
and the wider public than some of their predecessors.
In the cases of the groups mentioned here, as well as other
similar movements, there is a clear tendency by organisers
to stress the non-political nature of their motivations and
goals. In itself this is a significant development as the
issues of corruption and accountability in Greece have
long been seen through a political prism. The flowering
of such groups points to a genuine desire among some
citizens to contribute to resolving problems rather making
short-term impressions for political gains.
“We are not the ones who have asked you for a “fakelaki”
or any other kind of reward to treat you,” the doctors say
in the first line of the text explaining what their movement
is about via the blog they have created http://medkinima.
blogspot.gr The doctors often put up posters in public
hospitals declaring that bribes are not acceptable.
The movement was created after some of the doctors
met at a protest at the Health Ministry in Athens in 2010,
which is indicative of the fact that apart from sometimes
being sinners, Greek hospital staff are also sinned
against frequently, often working long hours for low
pay in difficult conditions. This makes the fact that the
movement has already attracted some 6,000 members
even more impressive.
7. Volunteers try to fill the void left by a
retreating state
One of the most worrying aspects of the crisis has been
that the financial constraints on the state and its everdecreasing role in a number of areas, such as social
welfare, healthcare and urban services. This has left
thousands of Greeks directly exposed to some of the
worst effects of the recession.
The idea of doing more than drawing attention to
unacceptable practices and trying to actually exert
pressure so that corrective action is taken is also gaining
momentum.
According to Eurostat, 31 percent11 of Greeks are at risk
of poverty or social exclusion, compared to 27.6 percent
in 2009, before the crisis began. Also about 65 percent
Another new group adopting this tactic is Emeis oi
Polites (We the Citizens), which is an association of
9
MALKOUTZIS | TEN RAYS OF LIGHT IN THE GREEK CRISIS
party in public life. Even last year, Greece came 145th out
of 146 countries in the World Giving Index14, which also
suggested that only 5 percent of Greeks donated money
and only 3 percent volunteered their time.
of Greece’s 1.3 million unemployed have been out of a
job for more than 12 months and therefore without proper
social insurance. In 2009, just 45.6 percent of Greece’s
jobless were long-term unemployed. At the time, Greece
only had around 500,000 people out of work. The impact
of the recession is as clear as the need for a safety net to
protect the growing number of people being pushed to
society’s fringes. In the state’s absence, this crucial role
is increasingly played by volunteer groups.
However, recent research suggests that the crisis is
prompting a change in the way Greeks approach the idea
of helping others. An opinion poll carried out by QED for
the Human Grid15, a scheme set up by the TEDx Athens
discussion forum to map and act as a bridge between the
various volunteer groups in the Greek capital, suggests
that a growing number of Greeks are giving up their time
for common causes. The survey, published in May this
year, indicated that there has been a 44 percent increase
in the number of Greeks taking part in volunteer projects
and solidarity activities since 2010, when Greece signed
up to the EU-IMF bailout.
Boroume12 (We Can) is one of the organizations that has
attracted most attention over the last couple of years as it
uses food donations and salvages ingredients that others
discard in order to provide meals for Greeks who cannot
afford to feed themselves. Similarly, the Greek branch
of Doctors of the World relies on the volunteer work of
doctors and medical experts to provide free healthcare
to Greeks who do not have enough social security credits
to visit public hospitals.
A third of those questioned said that they will likely
join a volunteer group soon, while 84 percent said that
they viewed the idea of volunteerism positively. Half
of the respondents also had a positive view of nongovernmental organizations and 46 percent were in
favour of collective activism. The latter is significant as
NGOs have often been viewed negatively in Greece due
cases of corruption, while some forms of activism, such
as urban intervention, have been regarded with suspicion
because of the absence of political influences and
connections.
A similar role is carried out by the Metropolitan Community
Clinic in the southern Athens suburb of Elliniko (http://
mkie-foreign.blogspot.gr/). Created in 2012, the clinic
is run by volunteer doctors and other staff who provide
medical assistance to more than 4,000 people a year
who cannot afford care elsewhere. The medicines and
equipment used at the clinic have been donated.
Also, a group of about 100 Athenians came together
in May this year to form the Symahoi Ygeias13 (Allies of
Health). While some of the group are doctors, it also
includes people from many other walks of life. Their initial
aim is to provide assistance to units that are providing
vital social work, such as municipal medical centers, the
“help at home” scheme for the elderly and disabled and
neighbourhood “friendship clubs”. The group has already
signed agreements with several municipalities in Athens
and hopes at some point to be able to set up its own
centers to provide medical assistance.
“So far our country has scored very low in terms of having
an active civil society but there is constant improvement,”
said Stathis Haikalis, who acted as a coordinator for
the survey. “There is a subtle but continuous trend of
people dealing with the nightmare in the Greek social
and economic spheres, which is the lack of trust in every
aspect of domestic life.”
There is a very practical element to the apparent trend
for more Greeks to become involved in volunteer groups,
since the effects of the crisis demand that people come
to the help of their fellow citizens. But there is also a more
existential aspect to this development as it indicates a
growing willingness for people to trust each other and
wean themselves off a dependence on political parties to
act as their social networks and providers.
This type of volunteerism is a relatively new concept in
Greece, which has a poor record of this kind of social
engagement, partly because of the relative economic
stability over the last few decades but also because of the
dominant role of the family in personal life and the political
11. http://appsso.eurostat.ec.europa.eu/nui/show.do?dataset=ilc_
peps01&lang=en/
12. http://www.boroume.gr/
13. http://www.symmaxoiygeias.uoa.gr/
14. https://www.cafonline.org/PDF/WorldGivingIndex2012WEB.pdf
15. http://www.slideshare.net/TEDxAthens/human-grid-presentation
10
MALKOUTZIS | TEN RAYS OF LIGHT IN THE GREEK CRISIS
The so-called “potato movement” had an immediate
effect as Greeks were able to buy local potatoes for
as little as 25 cents a kilo directly from farmers when
supermarkets were charging up to a euro or more for the
same produce. Having seen people’s positive response
to this initiative, producers of rice, olive oil and other
products followed suit. According to estimates, there are
now about 250 regular markets around Greece that allow
consumers to buy directly from the producers. In Katerini,
it is estimated that 40 percent of the northern city’s
residents buy their food from these markets. According
to a survey conducted by the Hellenic Confederation
of Professionals, Craftsmen & Merchants (GSEVEE),
22 percent of Greek households said they have bought
produce from markets designed to cut out wholesalers.
There is, however, plenty to be cautious about. The
QED survey found that 38 percent of those questioned
said they expect that they or their family members
will soon be in need of volunteer help. As long as an
economic recovery remains elusive, there will continue
to be tremendous pressure on Greek society and even an
increase in volunteerism is no substitute for a state that
can provide the social services that are so desperately
necessary in Greece’s situation.
8. An awakening of consumer conscience
One of the common complaints in Greece over the past
few years is that although wages and pensions have been
reduced substantially, the prices of even basic goods
remain high. The Organization for Economic Cooperation
and Development (OECD), for instance, found recently
that the same basket of supermarket goods costs 100
euros in Greece and 110 euros in Germany, where the
average wage is substantially higher.
In late 2012, the first urban consumer cooperative
that sourced food directly from producers, opened in
Athens. Membership of the scheme costs 20 euros and
relies on members volunteering their services. Although
established in other European countries, this form of
consumer action was an alien to concept in Greece,
where consumer awareness has been relatively low.
There are a number of reasons for prices not falling
significantly: a lack of genuine competition in certain
sectors, profiteering, rises in value-added tax and
consumption tax and a reliance on imports. The crisis
has, however, prompted somewhat of an awakening
among a section of Greek consumers who, with the help
of producers who also want to bypass these market
inefficiencies, have taken action into their own hands.
The store, located in the northeastern Athens suburb
of Halandri, is run by volunteers. Members of the
cooperatives take it upon themselves to travel around
the country to meet producers and strike deals to for
their products to be sold in the shop. The goods on
sale in the store have prices that are sometimes less
than half of similar products that are sold in other shops
or supermarkets. The Halandri store has about 300
members, while several other cooperatives have been
established in Athens since it opened.
There have been two key developments over the past
few years: producers have started selling directly to
customers, thereby cutting out the middlemen, while
consumers have come together to form cooperatives
that are able to source products in bulk and, therefore, at
more favorable prices.
The first years of Greece’s Eurozone membership were
marked by a boom in consumer spending, which reached
a peak of 151.6 billion euros in 2008 but fell to 117.4 billion
in 2012, a drop of 22.5 percent, as disposable income
also shrank. In these testing circumstances, when some
Greek families have found it difficult to buy even basic
goods, there is greater awareness about what products
cost, who makes them, who profits and how they can be
made available to buy for less. This has had a practical
consequence in that cheaper food has become available
to families that are struggling financially but there
has been a broader effect in terms of realigning the
relationship between consumers and producers.
The first real signs that the constrictions of the crisis
would bring about a change in consumer practices came
in early 2012 when a group of farmers from the potatogrowing region of Nevrokopi in northeastern Greece
began selling their produce directly to customers through
open-air markets that received the backing of some
municipalities. The farmers felt they were being squeezed
by wholesalers who had long dominated the agricultural
goods sector and were frustrated that cheaper imports
were being preferred by consumers.
11
MALKOUTZIS | TEN RAYS OF LIGHT IN THE GREEK CRISIS
Upstream Systems, for example, is a Greek company
involved in mobile phone marketing. It was founded
in 2001 but has grown considerably in recent years.
Between 2011 and 2013, its revenues grew by 32 percent
and the number of people it employees rose by 20
percent. Upstream has become one of the five largest
mobile marketing firms in the world with offices in nine
countries. Its sales cover 40 export markets but 70
percent of its 300 or so employees are in Athens.
While Greek consumers continue to get a raw deal overall,
there have been signs over the last two years that they
are also realizing the power they have in order to change
this situation. There is still some way to go before cartels
are smashed and there is proper market oversight from
the state but Greeks have taken the first steps in showing
they can force results themselves.
9. Tech start-ups click into place
Velti is another firm in the same sector that was founded
by two Greeks in 2001 and is now active in 32 cities
around the world with more than 500 employees. In
January 2011, Velti raised about $150 million through a
public offering on NASDAQ.
It is clear that the economic environment in Greece
over the last few years has been unfavourable for
local businesses. Demand has plummeted, liquidity
has evaporated and political instability coupled with
international speculation about Greece’s future in the
euro have created numerous and large obstacles for
Greek entrepreneurs in all sectors. Between 2009 and
2011, more than 486,000 businesses closed down, while
the 2012 accounts of almost 4,500 firms analyzed by the
Icap Group found that 52 percent were losing money.
At a more grassroots level, a number of Greek tech startups are beginning to break through as well. There are
more than 200 companies active in a sector which only
had a few firms before the crisis. Among the success
stories is BugSense, which provides software that
analyses and fixes mobile phone applications when they
crash. The company was founded by two Greeks under
the age of 30 in 2011 with $100,000 of seed funding. Their
software development kit (SDK) is now one of the most
popular in the world and the company employs more than
a dozen people in three countries.
While the business environment is undoubtedly negative,
thousands of companies have also been founded during
the crisis. Starting a business is one of the ways Greeks
have to combat an unemployment rate that is expected
to pass 27 percent by the end of 2013. Greeks’ desire
to try their luck in the business world was evident by
the amount of interest in a recent scheme for start-ups
to receive European Union funding through the National
Strategic Reference Framework (NSRF). The program
offered to cover around 50 percent of the start-up costs
and was about four times oversubscribed by the deadline
in May. Just over 23,000 companies, hoping to receive a
total of almost 1.6 billion euros in subsidies applied to the
scheme. Just 456 million euros was available.
Another Greek firm that has been making rapid progress
is Taxibeat. Four friends in Athens designed a mobile
phone application that allows passengers to locate
nearby taxi drivers and hail the one they prefer based on
distance, user ratings, car model and on-board amenities.
Since beginning its operations in May 2011, Taxibeat has
expanded to Brazil, France, Norway and Romania.
“There is an ecosystem of smaller companies that were not
on the map four years ago,” says Eric Parks, who is the cofounder of Pinnata, a Greek start-up behind a mobile phone
application that allows users to send interactive messages.
“The key effect of the emergence of all these start-ups has
been to provide a psychological boost,” he adds.
One sector where the emergence of new and dynamic
Greek companies has been noticeable is in information
and communications technology (ICT). Although there
were some firms active in this sector before the crisis,
they were mostly living off state contracts. There was
also innovation in this area but it was usually taking place
in universities and not within the private sector. Over the
last few years, there has been a flowering of Greek tech
companies on all levels: Big players have emerged on
the global market and start-ups have been able to get a
foothold in the local market.
The success of the big Greek players in the ICT sector
and the flowering of local tech start-ups has been one
of the few bright spots in the business sector during the
crisis. Taking just the mobile applications and software
sector alone, the value of exports from around 70 local
companies is worth about 700 million euros a year more
12
MALKOUTZIS | TEN RAYS OF LIGHT IN THE GREEK CRISIS
green energy sources and it has seen a tremendous rise in
the use of photovoltaic panels in particular.
than the combined worth of Greece’s annual revenues
from olive oil. The sector is growing by about 25 percent
a year and employs about 3,000 people, mostly highlyeducated engineers.
Ahead of the crisis, renewable energy, excluding the
big hydro units, accounted for less than 5 percent of
electricity production. In contrast, more than 50 percent
of energy produced came from the use of lignite and about
30 percent from natural gas. The use of domesticallysourced lignite helped keep electricity prices low but
proved damaging for the environment, while the use of
imported natural gas and oil was expensive and damaging
for Greece’s current account balance.
In effect, these companies have adapted to the recession
and some of the traditional obstacles in the Greek markets,
such as a lack of free competition, to evolve into small, agile
and export-oriented enterprises that are virtually crisis-proof.
They are able to tap into the considerable human resources
Greece has (one in four Greeks over 25 has completed
tertiary education) and launch entrepreneurial schemes that
required limited financing to get off the ground. Since they
need only a small amount of funding to start, they are usually
able to get this from angel investors. Recently, four funds
started providing funds through the EU’s JEREMIE initiative
for small- and medium-sized enterprises.
Several key factors have helped in making renewable
energy a much more significant part of Greece’s energy
mix over the past few years. The key development has
been in the area of photovoltaics, where the combination
of generous feed-in tariffs introduced in 2006, a
simplification of the legal framework in 2010, a fall in the
price of solar panels and government- and EU-subsidized
programs that provided financing via local banks despite
the general lack of liquidity have all contributed to a
significant rise in the use of this form of renewable energy.
The last couple of years have also seen regular events held
for start-ups to present their ideas, exchange thoughts with
others and attract investors. There are many reasons to
believe that the tech sector will continue to provide positive
developments for the Greek economy in the years to come.
The increase in the use of solar photovoltaics in Greece
over the last few years has been spectacular. According
to the Hellenic Association of Photovoltaic Companies
(HELAPCO), Greece had just 11 MW of capacity from
this form of renewable energy in 2008. This grew by 319
percent in 2009, 331 percent in 2010, 215 percent in 2011
and 146 percent in 2012 to reach 1,536 MW at the end
of that year. In comparison, installations for wind power,
which until recently led the way for renewable energy in
Greece, reached 1,749 MW by the end of 2012.
10. Here comes the sun:
Photovoltaics on the rise
A few years ago, Greece was seen as having much
unfulfilled potential in terms of renewable energy and was
considered a laggard in comparison to other southern
European countries, like Spain and Portugal, which benefit
from similar weather conditions. However, the crisis has
acted as a catalyst for Greece to explore better use of its
Greek PV Market
(grid-connected systems)
1600
1400
1200
1000
800
600
400
200
0
2008
2009
2010
2011
2012
New installed capacity
10.3
35.1
152.4
425.8
912.0
Comulative capacity
11.0
46.1
198.5
624.3
1,536.3
Source: http://www.helapco.gr/ims/file/market_statistics/pv-stats_greece_eng_2012.pdf
13
MALKOUTZIS | TEN RAYS OF LIGHT IN THE GREEK CRISIS
which pays energy producers, had run up a deficit of
more than 300 million euros. This gap is expected to grow
to 473 million euros by the end of this year and 905 million
euros by the end of 2014. There is little doubt that the
decision to slash tariffs and impose taxes on producers
has soured what appeared to be a genuine success story.
Some investors in this sector have launched legal action
against the government over these changes, which have
created a sense of uncertainty that may prove an obstacle
to some future projects.
This spike in the installation and use of photovoltaic
panels meant that at the end of 2012, Greece was third in
the world, behind Germany and Italy, in terms of energy
produced by photovoltaics per capita16 . Cumulative
photovoltaic capacity in the main electricity system is
due to reach 2,591 MW at the end of 2013 and 2,825 MW
by the end of 2014, according to Greece’s grid operator
(LAGIE).
While close to a quarter of the photovoltaics have been
installed as small, rooftop systems, there have also been
some large-scale installations. For example, In May this
year, China-based Upsolar completed a 1.5 MW solar
electric system in Kozani, northern Greece. Upsolar
first entered the Greek market in 2010 and has since
shipped more than 68 MW of modules to the country.
Also, in February Greece’s Public Power Corporation
(PPC) launched a tender for the construction of a 50 MW
photovoltaic park in the Peloponnese. The project could
earn PPC an estimated 28 million euros a year.
But this is by no means the end of the story for renewable
energy in Greece. In fact, it may represent the first,
perhaps flawed, steps. At the end of March, the Greek
government, Germany and the European Commission
signed a joint declaration of intent to reform and expand
the sector in Greece. The German Environment Ministry
and the Commission will finance the first phase of
the project. The European Commission’s Task Force
for Greece said that with the appropriate assistance
“the country can soon become a model of renewable
electricity generation”. This would certainly be a
significant achievement to emerge from the crisis.
However, the spike in the installation of photovoltaics
also serves as a salutary lesson for Greece in terms of
the planning and stable framework needed to harness
the power of renewable energy sources, especially in
the midst of an economic crisis. While generous feed-in
tariffs and tax breaks helped spark activity in the sector,
they also sowed the seeds of a future problem. Over the
last few months, the Greek government has realized that
it was being more generous to installers than its troubled
public finances could allow.
11. Greek wine raises a glass to exports
One of the aims of Greece’s adjustment program has
been to make the country more competitive, with a
particular view towards boosting its exports. The main
tool for this exercise has been the policy of internal
devaluation, which has seen wages drop substantially. As
a result, unit labor costs, which rose rapidly from 2001,
have been falling equally dramatically since 2009 and by
the end of this year are expected to be at around 2005
levels. The intention of this policy is that this drop in costs
is reflected in lower prices for goods and services.
Last November, as part of new austerity measures passed
through Parliament to secure further loans from the
Eurozone and the IMF, the Greek government imposed a
tax on solar projects of 25 percent to 30 percent of their
turnover, while other clean-energy plants pay 10 percent.
In May this year, the government announced substantial
reductions to the feed-in tariffs, which were the highest
in the EU and had acted as a major incentive for new
installations. For large projects and rooftop installations,
there were cuts of more than 40 percent in the rate offered
for energy produced from photovoltaics.
This has by no means triggered a boom in the export of
Greek goods, which had a total value of 27.6 billion euros
in 2012, but there has been a steady rise since 2009. Food
and beverages remain the leaders in Greece’s export
market and the last few years have seen somewhat of
a rebirth in the production of agricultural products for
foreign markets.
The Environment Ministry said the reductions were being
made because the Renewable Energy Sources Fund,
The exports of Greek strawberries, for example, have
skyrocketed during the past few years. In 2007, Greece
exported just over 4,000 tons of strawberries with a
16. http://www.renewableenergyworld.com/rea/news/article/2013/01/
greece-sees-impressive-solar-pv-growth-despite-banking-crisis
14
MALKOUTZIS | TEN RAYS OF LIGHT IN THE GREEK CRISIS
focus on social media, have executed effective initiatives
via trade events and inviting people over to visit Greece
and tour the vineyards. They started out by inviting wine
writers and bloggers, and now even bring in wine buyers.
“Five years ago, they just bought advertising space in
wine magazines. This strategy failed, and a lot of money
was spent without making any impact,” adds Stolz.
value of 5.7 million euros. In 2012, exports reached
more than 26,000 tons with a value of almost 40 million
euros, making strawberries one of Greece’s 100 most
exportable products. The rise in strawberry exports has
been driven partly by the fact that producers have tapped
into new markets. Russia, which is not among the main
importers of Greek goods overall, accounts for more than
40 percent of Greek strawberry exports.
He also identifies improved cooperation between vintners
as another reason behind the success of Greek wines in
recent years.
The Greek exporters who have been successful during
the crisis, despite the difficulties created by the lack of
liquidity and uncertainty about Greece’s future, have
been the ones that adapted their methods, improved their
products and sought new markets. Greek winemakers
are a good example of this. According to the Panhellenic
Exporters’ Association, the volume of Greek wine
exported increased from 28,438 tons in 2008 to a peak
of 39,591 tons in 2011. The value of wine exports shot
up from 55.6 million euros in 2008 to 66.2 million euros
last year.
Year
EXPORTS
“Some of them have started working together as a
team, rather than only looking for their own, short-term
benefit,” he says. “For example, the young winemakers
of Naoussa meet every two weeks, share wines from
around the world, discussing and executing initiatives to
support their region.”
While Germany remains by far the top market for Greek
wines, absorbing 47 percent of exports in volume and 41
percent in terms of value, the United States is the most
profitable. Greece exports just 5.9 percent of its wine
to the USA but these sales account for 13.2 percent of
total revenues for Greek wine exports. Greek winemakers
have shown flexibility by adapting to the new wine trends
in the USA, where critics and sommeliers are becoming
less conservative and are on the lookout for new and
different wines.
UNIT VALUE
Index 2008=100
Value
( ,000 € )
Volume
(tons)
( €/ton )
2008
55,640
28,438
1,957
100.00
2009
59,173
35,071
1,687
86.24
2010
58,681
33,605
1,746
89.25
2011
65,178
39,591
1,646
84.14
2012
66,275
34,432
1,925
98.38
“Greek wines fit in perfectly into this trend, as they are
rarely too heavy, with restrained alcohol levels and being
great food pairing partners,” says Stolz. “In terms of
product and quality, the last five years have been amazing
for Greek wine. There are now many young people who
make wine and have a different mindset than the older
generation. Quality keeps going up, ancient varieties are
being revived and the winemaking has become much
more refined.”
Source: Panhellenic Exporters’ Association, 2013
This improvement has been based on much more than
just internal devaluation. It is, instead, a reflection of
a concerted effort on the part of a lot of Greece’s top
winemakers, as well as many smaller producers, to take
the steps necessary to become more outward-looking.
The increase in exports has partly been based on better
promotion, according to Markus Stolz, an expert on Greek
wines, who acts as a middleman between producers and
importers.
“The Greek wine industry, which has set up the New
Wines of Greece website17 has done a very solid job of
promoting Greek wine,” he says. “They have learned to
17. http://www.newwinesofgreece.com/home/
15
CV of the author
Imprint
Nick Malkoutzis is Deputy Editor of the English-language edition
of Kathimerini, a Greek national newspaper, and a contributor
to Macropolis, which provides political and economic analysis
from Greece.
Friedrich-Ebert-Stiftung
Department of Western Europe / North America
Division for International Dialogue
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Responsible:
Anne Seyfferth, Head of the Department of Western Europe /
North America
Tel.: ++49-30-269-35-7736 | Fax: ++49-30-269-35-9249
Email: fes-wena@fes.de
www.fes.de/international/wil
The views expressed in this publication are not necessarily
those of the Friedrich-Ebert-Stiftung or the organizations for
which the author works.
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ISBN 978-3-86498-654-3